Funders are missing opportunities to use the information they collect on the impact of funding to improve their effectiveness, according to research published today by the charity think tank New Philanthropy Capital.
Researchers questioned 114 funders for the report, which is called Funding Impact. It says that most are collecting information on outcomes from grant recipients, but only 38 per cent are using this to influence funding allocations and 42 per cent to understand the overall impact of their grant programmes.
This happens partly because of the poor quality of some of the evidence fed back to funders, the report says, but there is also scope for funders to improve their use of data, it claims – for example, by talking to each other and sharing information.
Funding Impact is the first piece of research to examine the impact practices of UK funders; NPC carried out research last year into those of voluntary sector organisations.
The report reveals a positive attitude to impact measurement among funders, with 88 per cent of those surveyed saying that it makes charities more effective and 89 per cent that it makes funders more effective too.
Only one in five funders say they are not measuring their own impact and 72 per cent plan to boost their impact measurement over the next three years, the report says.
But one in 10 funders remains unconvinced about the importance of measuring their own impact.
The report also highlights the challenges experienced by funders when measuring impact, including a lack of capacity and an imbalance in perceptions between funders and charities over the level of funding available for impact measurement.
Dan Corry, chief executive of NPC, said: "It is heartening to see from this report that many funders are now tuned in to the importance of impact, both their own and that of their grantees.
"However, since the point of measuring impact is to improve, it’s a concern that the data collected is not used as much as it could be and instead just gathers dust on a shelf."
Funding Impact has been produced in conjunction with LBG, a membership organisation for companies that want support in contributing to the community, and is funded by the Baring Foundation, the City Bridge Trust, LBG, the Northern Rock Foundation and Trust for London.